Question
Suppose the production function of a firm is f(x) = x1^a * x2^b, a; b > 0. What is the firm's global returns to scale?
Suppose the production function of a firm is f(x) = x1^a * x2^b, a; b > 0. What is the firm's global returns to scale? What is the firm's local returns to scale? Does it exhibit increasing, decreasing, or constant returns to scale?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Microeconomics For Today
Authors: Irvin B. Tucker
10th Edition
1337613061, 978-1337613064
